Smt. Vijaya Sethi, Indore V. The ITO 4(3), Indore

ITA 216/IND/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99024 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 19-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: C P RAWKA
• Keywords: Salary income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO.216/IND/2014 A.Y. : 2008-09 SMT. VIJAYASETHI, ITO 4(3), 268-B, SANGAM NAGAR, VS INDORE. INDORE APPELLANT RESPONDENT APPELLANT BY SHRI C.P. RAWKA RESPONDENT BY SHRI MOHD. JAVED DATE OF HEARING 31.3.2017 DATE OF PRONOUNCEMENT 31.3.2017 C O R R I G E N D U M PER SHRI C.M. GARG, JM IN THE ABOVE-CAPTIONED APPEAL, IN THE TITLE OF THE ORDER OF THE TRIBUNAL DATED 30 TH SEPTEMBER, 2015 IN ITA NO. 216/IND/2014, A.Y. 2006-07 IS SUBSTITUTED WITH A .Y. 2008-09. (O.P.MEENA) (C.M. GARG) ACCOUNTANT MEMBER JUDI CIAL MEMBER MARCH 31 ST 2017. DN/ SMT. VIJAY SETHI,ITA NO. 216/IND/2014 2 O R D E R SMT. VIJAY SETHI,ITA NO. 216/IND/2014 3 PER GARASIA, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II,INDORE, DATED 28.11.2013 CONFIRMING TH E IMPOSITION OF PENALTY BY THE AO AT RS. 4,63,500/-. 2. THIS IS APPEAL IS BARRED BY TIME BY THREE DAYS. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTEDAN AFFIDAVIT SWOR N BY SMT. VIJAYASETHI. IT WAS STATED ON OATH THAT THE APPEAL WAS FILED BY HER ON 19.3.2014 AND THE APPELLATE ORDER WAS RECEIV ED BY HER ON 15.1.2004 AND, THUS, THE APPEAL WAS DUE TO BE FI LED ON 16.03.2014. SHE PAID THE REQUIRED FEES ALSO ON 04.0 3.3014. AS THE 15 TH AND 16 TH MARCH WERE SATURDAY, SUNDAY AND 17 TH MARCH AS PUBLIC HOLIDAY DUE TO HOLI AND THE APPEAL COULD NOT BE FILED. THE APPEAL COULD BE FILED ONLY ON 19 TH MARCH, 2015. SHE PRAYED FOR CONDONATION OF DELAY. 3. WE HAVE GONE THROUGH THE AFFIDAVIT AND FOUND THAT T HE DELAY WAS REASONABLE AND THERE WAS NO INTENTION ON THE PART OF THE ASSESSEE TO FILE THE APPEAL LATE. WE, THEREF ORE, CONDONE THE DELAY OF 3 DAYS. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE AIR INFOR MATION GENERATED FROM THE COMPUTER REVEALED THAT THE ASSES SEE HAS SMT. VIJAY SETHI,ITA NO. 216/IND/2014 4 MADE INVESTMENT IN MUTUAL FUND OF 51,61,838/-. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF INVESTMENT IN MUTUAL FUND. TH E ASSESSEE EXPLAINED THAT THESE INVESTMENTS WERE MADE BY HER S ON AND HE USED HER PAN NUMBER FOR INVESTMENT IN MUTUAL FUN D AS HE WAS NOT AN INCOME TAX ASSESSEE. THE ASSESSEE PRODUC ED DETAILS/SOURCE OF INVESTMENT OF RS. 16,50,000/- BEF ORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AS SESSEE ALSO SUBMITTED THAT THERE WAS RE-INVESTMENT IN ING MUTUAL FUNDS TO THE TUNE OF RS. 20,10,000/- BY SWITCHING O VER FROM ONE SCHEME TO ANOTHER SCHEME. THUS, THE TOTAL INVES TMENT WAS MADE ONLY AT RS. 31,50,000/- INSTEAD OF RS. 51, 61,838/- AS MENTIONED IN AIR INFORMATION. THE ASSESSEE EARN ED INTEREST OF RS. 11,838/- SWITCHING FROM ONE SCHEME TO ANOTHER SCHEME. THE ASSESSEE HAD NOT EXPLAINED THE SOURCE O F RS. 15 LAKHS IN HER STATEMENT. THEREFORE, SHE HAS AGREED T HAT THIS AMOUNTMAY BE TREATED AS INVESTMENT MADE FROM UNDISC LOSED SOURCES OF THE INCOME. THEREFORE, THE AO HAS LEVIED THE PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. SMT. VIJAY SETHI,ITA NO. 216/IND/2014 5 5. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 6. THE LD. AUTHORIZED REPRESENTATIVE FILED A WRITTEN STATEMENT WHICH READS AS UNDER :- THE FACTS RELATING TO IMPOSITION OF PENALTY U/S 271 (1) (C) AROSE BECAUSE DURING THE COURSE OF ASSESSME NT THE A.O. CAME ACROSS INFORMATION THAT AN INVESTMENT OF RS. 51,61,838/- WAS MADE DURING THE YEAR BY THE ASSESSEE IN MUTUAL FUNDS. DURING THE COURSE OF ASSESSMENT THE STATEMENT OF THE ASSESSEE WAS RECORDED ON OATH WHERE IN IT WAS STATED THAT HER SO N SHRIHIMANSHU WAS INVESTING IN MUTUAL FUNDS & SINCE HE DID NOT HAVE PAN NO. THE PAN OF THE ASSESSEE WAS USED. SHE ALSO STATED THAT SHE WAS NOT AWARE OF THIS INVESTMENT. ON BEING ASKED TO PRODUCE SOURCE O F INVESTMENT BY HIS SON IT WAS CLARIFIED THAT OUT OF THE TOTAL AMOUNT OF RS. 51,61,838/-, RS. 20,10,000 WAS SWITCH OVER FROM ONE FUND TO ANOTHER & THE TOTAL INVESTMENT WAS ONLY RS. 31,50,000/-. SMT. VIJAY SETHI,ITA NO. 216/IND/2014 6 AFTER LOT OF EFFORTS THE ASSESSEE TRACED SOME CREDI TORS FROM WHOM CONFIRMATION OF GIVING LOAN TO SHRIHIMANSHU WERE OBTAINED TO THE EXTENT OF RS. 16,50,000/- & SUBMITTED. THE SAME HAVE BEEN ACCEPTED. SINCE THE LIMITATION FOR ASSESSMENT WAS INVOLVED THE ASSESSEE VOLUNTARILY SURRENDERED AS SH E COULD NOT OBTAIN THE DETAILS OF THE PERSONS WHO ADVANCED THAT AMOUNT TO HIS SON. IT IS SUBMITTED THAT IN THE PRESENT CASE ASSESSMENT PROCEEDINGS COMMENCED WITH ISSUE OF NOTICE U/S 143 (2) IN SEPTEMBER, 2009. EFFECTIVE PROCEEDINGS START ED IN SEPTEMBER, 2010. IT IS ALSO NOT IN DISPUTE THAT THE SON OF THE ASSESSEE LEFT INDIA FOR HIGHER STUDIES I N 2010 & IN HIS ABSENCE, THE ASSESSEE WAS IN A HELPLESS SITUATION & COULD NOT GIVE FURTHER INFORMATION HOW THE INVESTMENT WAS MADE BY HIS SON (THE XEROX COPY OF VISA). THUS SURRENDER WAS MADE BY HER VOLUNTARILY. PG.NO. : 1 TO 9. IT IS EMPHASIZED THAT THIS IS A SITUATION WHERE SMT. VIJAY SETHI,ITA NO. 216/IND/2014 7 EXPLANATION THAT SON MADE THE INVESTMENT IS ACCEPTED. IT IS NOT IN DISPUTE TH AT THE INVESTMENT WAS MADE BY SON OF THE ASSESSEE SHRIHIMANSHU & NOT BY THE ASSESSEE. THE PAN NO. & CONFIRMATION ABOUT PROVIDING LOAN TO HIMANSHU TO THE EXTENT OF 16,50,000/- WERE SUBMITTED DURING THE ASSESSMENT PROCEEDINGS & HAVE BEEN ACCEPTED. FOR THE REST OF THE AMOUNT SINCE THE ASSESSEE COULD NOT GET DETAILS FROM HIS SON, TO AVOID LITIGATION & BUY PEACE THE SURRENDER WAS MADE. IT IS SUBMITTED THAT THE EXPLANATION OFFERED HAS BEEN FOUND & CONSIDERED TO BE RELIABLE IN PART & HENCE IN THE CIRCUMSTANCES NO PENALTY IS LEVIABLE. IT IS FURTHER SUBMITTED THAT THE SURRENDER MADE BY THE ASSESSEE WAS DUE TO PAUCITY OF TIME COUPLED WITH THE IGNORANCE OF SOURCE OF INVESTMENT AS THE SAID INVESTMENT WAS MADE BY THE ASSESSEE'S SON. IT MAY KINDLY BE APPRECIATED THAT THE SOLE OBJECT OF THE SMT. VIJAY SETHI,ITA NO. 216/IND/2014 8 SURRENDER WAS TO AVOID FURTHER LITIGATION AND TO PURCHASE PIECE OF MIND UNDER BONA FIDE BELIEF THAT THE SAID SURRENDER WOULD NOT RESULT IN INITIATION OF PENALTY. THESE ASPECTS WERE BROUGHT TO THE KNOWLEDGE OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BUT THE ASSESSEE'S SUBMISSION DID NOT FIND FAVOUR. DURING THE COURSE OF APPELLANT PROCEEDINGS FACTS OF THE CASE WERE HIGHLIGHTED AND CITATION IN FAVOUR OF ASSESSEE'S SON WERE BROUGHT TO THE NOTICE OF LEARNED COMMISSIONER OF INCOME TAX APPEAL WHICH ARE AS UNDER- L.CIT V KERALA TRANSPORT CO. (2004) 270 ITR 149(PG.NO.10-11) 2.KALYANSARKAR VS. DEPUTY COMMISSIONER OF INCOME TAX (2013) 27 ITR (TRIB) 360 (PG SMT. VIJAY SETHI,ITA NO. 216/IND/2014 9 NO. 12-13) THE LEARNED COMMISSIONER OF APPEAL DISMISSED THE APPEAL RELYING UPON THE HONORABLE SUPREME COURT DECISION IN THE CASE OF MAK DATA PVT. LTD. IN THE ABOVE CONTEXT, IT IS SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME TAX APPEALS ERRED IN APPLYING THE ABOVE APEX COURT DECISION IN-AS-MUCH A S THE FACTS OF THE CASE ARE DISTINGUISHABLE. IN MAK D ATA CASE SURRENDER WAS AFTER THE DETECTION BY THE DEPARTMENT, WHEREAS IN THE INSTANT CASE, THE SURRENDER IS DUE TO THE REASON THAT THE ACTUAL INVESTOR I.E. THE ASSESSEE'S SON INVESTED THE AMOUN T UNDER REFERENCE BUT THE TRANSACTION CARRIED OUT BY USING ASSESSEE'S PERMANENT ACCOUNT NUMBER AS HER SON DID NOT POSSESS PERMANENT ACCOUNT NUMBER. SECONDLY, THE ACTUAL INVESTOR I.E. THE ASSESSEE'S S ON WAS IN ABROAD AT THE TIME OF ASSESSMENT PROCEEDINGS. SO, THERE IS NO IOTA OF CONCEALMENT ON THE ASSESSEE'S PART. SIMILAR SITUATION HAS BEEN SMT. VIJAY SETHI,ITA NO. 216/IND/2014 10 EXAMINED BY HONORABLE SUPREME COURT IN THE CASE OF K.P. MADHUSUDHNAN V/S CIT (251 ITR 99). IT WAS HELD BY THE SUPREME COURT THAT- THOUGH THE ASSESSEE, A FIRM, HAD TAKEN CERTAIN BANK DRAFTS FOR PAYMENTS TO SUPPLIERS OF RICE IN ANDHRA PRADESH, IT HAD MADE THE ENTRIES IN ITS ACCOUNTS NO T ON THE DATES ON WHICH THEY WERE OBTAINED BUT A FEW DAYS LATER. THE EXPLANATION OF THE ASSESSEE WAS THA T SUFFICIENT CASH BALANCE WAS NOT AVAILABLE ON THOSE DATES, IT HAD OBTAINED HAND LOANS FROM FRIENDS, AND , AS IT HAD EXPECTED TO REPAY SUCH LOANS WITHIN A SHO RT TIME, NO ENTRIES WERE MADE IN ITS BOOKS OF ACCOUNT IN RESPECT THEREOF THE ASSESSEE ALSO STATED THAT SINCE IT WAS UNABLE TO FURNISH EVIDENCE FOR SUCH LOANS IT OFFERED THE AMOUNT OF RS. 93000 AS ADDITIONAL INCOME. PENALTY PROCEEDINGS WERE INITIATED BY THE ASSESSING OFFICER UNDER SECTION 271 (1)(C) OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER FOUND THE ASSESSEE'S EXPLANATION UNACCEPTABLE, NOTED THAT IT HAD OFFERED THE AMOUNT OF RS.93000 AS ADDITIONAL SMT. VIJAY SETHI,ITA NO. 216/IND/2014 11 INCOME, AND APPLYING EXPLANATION 1 (B) TO SECTION 271 IMPOSED A PENALTY ON THE ASSESSEE. THE APPELLATE TRIBUNAL CANCELLED THE PENALTY, INTER ALIA, FOR THE REASON THAT IN THE NOTICE INITIATING PENALTY PROCEEDINGS THE ASSESSEE WAS NOT INTIMATED ABOUT THE PROPOSED ACTION UNDER EXPLANATION 1 (B) TO SECTION 271 (1)(C); BUT THE HIGH COURT, ON A REFERENCE, HELD THAT THE IMPOSITION OF PENALTY WAS VALID. ON APPEAL TO THE SUPREME COURT: HELD, AFFIRMING THE DECISION OF THE HIGH COURT, THA T THE PENALTY WAS INVALIDLY LEVIED. THE EXPLANATION TO THE SECTION 271 (1) (C) IS A PART OF SECTION 271. WHEN THE ASSESSING OFFICER OR THE APPELLATE ASSISTANT COMMISSIONER ISSUES A NOTICE UNDER SECTION 271, HE MAKES THE ASSESSEE AWARE THAT THE PROVISIONS THEREOF ARE TO BE USED AGAINST HIM. THESE PROVISIONS INCLUDE THE EXPLANATION. BY VIRTUE OF THE NOTICE UNDER SECTION 271 THE ASSESSEE IS PUT TO NOTICE THAT, IF HE DOES NOT PROVE, IN THE CIRCUMSTANCES STATED IN THE EXPLANATION, THAT HIS SMT. VIJAY SETHI,ITA NO. 216/IND/2014 12 FAILURE TO RETURN HIS CORRECT INCOME WAS NOT DUE TO FRAUD OR NEGLECT, HE SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS THEREOF AND CONSEQUENTLY BE LIABLE TO THE PENALTY UNDER THE SECTION. NO EXPRESS INVOCATION OF THE EXPLANATION TO SECTION 271 IN THE NOTICE UNDER SECTION 271 IS NECESSARY BEFORE THE PROVISIONS OF THE EXPLANATION ARE APPLIED. REFERENCE IS FURTHER INVITED TO HONORABLE MADHYA PRADESH HIGH COURT DECISION IN THE CASE OF PUNJAB TYRES 162 ITR 517 11P IN WHICH HONORABLE COURT HAS CANCELLED THE PENALTY IN THE SIMILAR CIRCUMSTANCES. IT IS THUS PRAYED THAT THE PENALTY MAY KINDLY BE CANCELLED. 7. ON THE OTHER HAND, THE LD. SENIOR D.R. RELIED UPON THE ORDER OF THE AO. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE SMT. VIJAY SETHI,ITA NO. 216/IND/2014 13 ASSESSEE IS A TEACHER BY PROFESSION. SHE WAS ASKED ABOUT HIS INVESTMENT AND ON BEING ASKED TO PRODUCE THE SOURCE OF INVESTMENT, SHE STATED THAT THE INVESTMENT WAS DONE BY HIS SON AND THE CONFIRMATION OF LOAN HAVE BEEN OBTAINED TO THE EXTENT OF RS 16,50,000/-. THE ASSESSEES SON WAS LE FT INDIA FOR HIGHER STUDIES IN 2010 AND IN HIS ABSENCE, THE ASSE SSEE WAS HELPLESS AND COULD NOT GIVE INFORMATION AS TO HOW H IS SON MADE THE INVESTMENT. THE SON HAD MADE ALL THIS INVE STMENT AND, THEREFORE, SHE WAS NOT ABLE TO GIVE THE EXPLAN ATION REGARDING THE INVESTMENT. THE LD. COUNSEL FOR THE A SSESSEE HAS ALSO MADE THE SUBMISSIONS BEFORE US THAT THE ASS DE RIVES INCOME FROM SALARY AND INTEREST INCOME AND SHE DID NOT HAVE ANY OTHER SOURCE OF INCOME. THEREFORE, THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF HER LOAN. THEREFORE, SHE HAS VOLUNTARILY ADMITTED THE INCOME. WHEN SHE HAS VOLUNTARILY ADMIT TED THE INCOME AND WHEN THE ASSESSEE HAD NOT CONCEALED ANY PARTICULARS OF INCOME. MOREOVER, WHILE FILING THE R ETURN, THE ASSESSEE COULD NOT PROVE THE SOURCE OF RS. 15 LACS OF HIS INVESTMENT. WE FIND THAT THE ASSESSEE HAS DISCLOSED ALL THE RELEVANT FACTS BEFORE THE AO. THE ASSESSEE SIMPLY C OULD NOT SMT. VIJAY SETHI,ITA NO. 216/IND/2014 14 EXPLAIN THE SOURCE AS HER SON WAS ABROAD. THEREFORE , THE PENALTY CANNOT BE LEVIED SIMPLY ON THIS GROUND. 9. THE POSITION OF LAW REGARDING LEVY OF PENALTY U/S 2 71(1)(C) HAS UNDERGONE A SUBSTANTIAL CHANGE AFTER INSERTION OF EXPLANATION I TO SECTION 271(1)(C) WITH EFFECT FROM 01.04.1976. EXPLANATION 1 TO SECTION 271(1)(C) RAISES A PRESUMP TION THAT AS AND WHEN ANY AMOUNT IS ADDED OR DISALLOWED IN CO MPUTING THE TOTAL INCOME, THE SAME SHALL BE DEEMED OR REPRE SENT THE INCOME IN RESPECT OF WHICH THE PARTICULARS HAVE BEE N CONCEALED. FURTHER WITH EFFECT FROM 10.9.1986 AMEND MENT HAS BEEN MADE TO EXPLANATION 1(B) TO SECTION 271(1)(C), AFTER THIS AMENDMENT FURTHER ONUS HAS BEEN PLACED ON THE ASSES SEE TO PROVE THAT EXPLANATION FURNISHED BY HIM WAS BONA FI DE. THE POSITION NOW IS THAT UNLESS AND UNTIL THE ASSESSEE SUBSTANTIATES THE EXPLANATION AND PROVES THAT THE E XPLANATION WAS BONA FIDE, THE ADDITION MADE TO HIS INCOME SHAL L BE DEEMED TO REPRESENT THE CONCEALED INCOME. ON ANALYS IS OF PROVISIONS OF SECTION 271(1)(C), IT IS OBSERVED THA T EXPLANATION 1 TO SECTION 271(1)(C) PROVIDES THE SITUATION, WHER E NO EXPLANATION FOR THE FAILURE IS OFFERED BY THE ASSES SEE OR WHERE SMT. VIJAY SETHI,ITA NO. 216/IND/2014 15 THE EXPLANATION THAT HAS BEEN OFFERED IS FOUND TO B E FALSE OR WHERE THE ASSESSEE IS NOT ABOUT TO SUBSTANTIATE THE EXPLANATION OFFERED BY HIM. IN ALL THE CASES, THE A MOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON SHALL BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH THE PARTICULARS HAVE BEEN CONCEALED. AS PER PROVISO TO THIS EXPLANATION, THE ONUS TO ESTABLISH THAT EXPLANATION OFFERED WAS BONA FIDE AND FACTS RELATING TO SAME AND MATERIAL T O THE COMPUTATION OF HIS INCOME EVEN DISCLOSED BY HIM WIL L BE ON THE PERSONS CHARGED FOR CONCEALMENT. 10. AS PER THE PROVISIONS 2 TO EXPLANATION 1(B) NOW THE ENTIRE ONUS IS ON THE ASSESSEE TO NOT ONLY OFFER AN EXPLANATION BUT ALSO TO SUBSTANTIATE IT AND TO PROVE THAT THE P RESUMPTION WAS BONA FIDE. AT THE SAME TIME THE PRESUMPTION SO RAISED BY THE EXPLANATION 1 IS REBUTTABLE. THE EFFECT IS THAT UNLESS AND UNTIL REBUTS THE PRESUMPTION, HE WOULD BE LIABLE TO PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. IT IS NO W ESTABLISHED LAW THAT PRESUMPTION WOULD NOT STAND RE BUTTED MERELY BY FURNISHING ANY GENERAL OR FANTASTIC OR FA NCIFUL OR UNREASONABLE EXPLANATION BY THE ASSESSEE, THE EXPLA NATION SMT. VIJAY SETHI,ITA NO. 216/IND/2014 16 SHOULD BE BASED ON COGENT AND RELEVANT MATERIAL AND SHOULD BE ACCEPTED TO THE AUTHORITIES. THE EXPRESSION FURNISHING THE INACCURATE PARTICULA RS OF INCOME HAS BEEN NOT DEFINED IN THE ACT. THE EXPRES SION INACCURATE REFERS TO NOT ONLY IN CONFORMITY WITH THE FACT OR TRUTH AND THAT IS AMENDMENT, WHICH IS RELEVANT IN T HE CONTEXT OF FURNISHING INACCURATE PARTICULARS. THE MEANING B Y FURNISHING INACCURATE PARTICULARS OF INCOME IMPLIES FURNISHING OF DETAILS OR INFORMATION ABOUT THE INCOME WHICH AR E NOT IN CONFORMITY WITH THE FACT OR TRUTH. THE DETAILS OR I NFORMATION ABOUT INCOME DEALS WHICH ARE FACTUAL DETAIL OF INCO ME AND THIS CANNOT BE EXTENDED TO THE AREA, WHICH ARE SUBJECTIV E SUCH AS STATUS OF TAXABILITY OF INCOME, ADMISSIBILITY OF DE DUCTION AND INTERPRETATION OF LAW. FURNISHING OF INACCURATE INF ORMATION, THUS, RELATES TO FURNISHING THE FACTUAL INCORRECT D ETAILS AND INFORMATION ABOUT THE INCOME. THE ADMISSION OR REJE CTION OF A CLAIM SUBJECT TO EXERCISE AND WHETHER THE CLAIM IS ACCEPTED OR REJECTED HAS NOTHING TO DO WITH FURNISHING OF INACC URATE PARTICULARS OF INCOME. RAISING A LEGAL CLAIM, EVEN IF IT IS ULTIMATELY FOUND TO BE LEGALLY UNACCEPTABLE CANNOT AMOUNT TO SMT. VIJAY SETHI,ITA NO. 216/IND/2014 17 FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE FIND THAT, IN THIS CASE, THE ASSESSEE HAS MADE A BONA FIDE LEGAL CLAIM, WHICH WAS NOT ACCEPTED BY THE TAX AUTHORITY OR JUDI CIAL AUTHORITY. WE FIND THAT THE ASSESSEES CLAIM WAS NO T ACCEPTED BY THE AUTHORITY, IT DOES NOT MEAN THAT THE ASSESSE E HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE HON 'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. RAJASTHAN SPINNING AND WEAVING MILLS REPORTED IN (2009) 13 SCC 448, CONSIDERED THE EARLIER DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA AND ORS VS. DHARMENDRA TEXTILES PROCESSORS &ORS., REPORTED IN (2008) 306 ITR 277 (SC) AND HELD THAT IT GOES WITHOUT SAYING THAT FOR APPLICABILITY OF SECTION 271(L)(C) OF THE ACT, CONDITION STATED THEREIN MUST EXIST. THE ABOVE SAID DECISION CAME UP FOR CONSIDERATION IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE PETROPRODUCTS PVT., LTD., REPORTED IN (2010) 322 ITR 158 (SC). ON READING OF SECTION 271(1)(C) , THE HON'BLE SUPREME COURT POINTED OUT THAT IN ORDER TO BRING THE CASE UNDER SECTION 271(1)(C), TH ERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE SMT. VIJAY SETHI,ITA NO. 216/IND/2014 18 ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHE D INACCURATE PARTICULARS OF HIS INCOME. IN ORDER TO E XPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION, THE PENALTY PROVISION COULD NOT BE INVOK ED. THUS, THE HON'BLE SUPREME COURT POINTED OUT THAT A MERE M AKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSEL F, WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGA RDING THE INCOME OF THE ASSESSEE. THE READING OF THE DECISION OF THE HON'BLE SUPREME COURT REFERRED TO ABOVE, THUS POINT S OUT THAT FOR SUSTAINING PENALTY, THE BONA FIDE EXPLANAT ION OF THE ASSESSEE MUST BE LOOKED AT, SO THAT THE CONTUMACIOU S CONDUCT OF THE ASSESSEE FOR THE PURPOSE OF SUSTAINI NG THE PENALTY WOULD BE TAKEN AS CONDITION THAT IS THE MAI N REQUIREMENT UNDER SECTION 271(L)(C) OF THE ACT. REFERRING TO THE DECISION IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS, (SUPRA), THE HON'BLE SUPREME COURT POINTED OUT THAT IN THE BACKGROUND OF SECTION 271(L )(C) OF THE ACT, THERE IS NO NECESSITY OF MENSREA BEING SHOWN BY THE REVENUE, HOWEVER REFERRING TO THE EXPLANATION TO SE CTION 271(L)(C) PENALTY BEING A MULTIPLE LIABILITY, THE B ONA FIDE OF SMT. VIJAY SETHI,ITA NO. 216/IND/2014 19 THE CONDUCT OF THE ASSESSEE NECESSARILY ASSUMES SIG NIFICANT EVEN THOUGH WILLFULNESS OF THE ASSESSEE MAY NOT BE A CRITERIA, THE CONDUCT IS TO BE CONSIDERED. THUS, A MERE FACT THAT THE ADDITION IN THIS CASE HAS BEEN SUSTAINED BY THIS CO URT BY ITSELF WOULD NOT LEAD TO THE AUTOMATIC APPLICATION TO SECTION 271(L). THE ASSESSEE HAS SURRENDERED THIS INCOME AS ASSESSEE COULD NOT PROVE THE SOURCE OF THE INCOME B UT IT IS NOT DISPROVED BY THE DEPARTMENT, THEREFORE, WE D ELETE THE PENALTY. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON ______SEPTEMBER, 2015. (B. C. MEENA) ACCOUNTANT MEMBER ( D.T.GARASIA) JUDICIAL MEMBER DATED :_______SEPTEMBER, 2015. SMT. VIJAY SETHI,ITA NO. 216/IND/2014 20 CPU* 10219